Founder of Antler Capital

Stanley Tsai, CFA

Macroeconomics

China's resilient export performance in October was a pleasant surprise amid a confluence of bad news on the domestic front. But export strength may be dwindling and progressively tougher comps are not the only factor to blame.
A record trade surplus. Overseas shipments once again topped estimates in October, driving the country's monthly trade surplus to USD84.5bn, the highest on record. The 27.1% growth in exports was propelled by robust global trade activity. China has also been getting a greater share of export orders thanks to still sluggish outputs from competing nations that have yet to return to full capacity. Early Christmas orders to beat shipment delays provided an extra boost (Exhibit 1).
However, price inflation has become the dominant driver, while unit growth has tailed off. Average export prices began to tick up in July and jumped over 10% y/y in September. Overseas buyers will be feeling the pinch of China's surging factory gate prices this Christmas. But more importantly, rising unit prices may suggest that we are now much farther along in the reopening trade in China's key export markets. Demand has shifted considerably from essential to discretionary items. That story may run out of steam soon.
Europe presents additional uncertainties in the coming months, as a spike in infections threatens to throttle its recovery. The EU was pivotal to China's export strength last month, buffering the deceleration in US orders. It remains to be seen whether a wider outbreak on the continent will be a hit to export demand or a catalyst for resurgent sales of household / electronics merchandise. What's more certain is the eventual rebound of Southeast Asia, which will chip away at orders for Chinese exports, especially if power shortages escalate in the winter months.
Price effects will likely continue to drive exports in machinery, electronics and home appliances as we approach the holiday season. That is bad news for international consumers. The average household appliance unit shipped in September had an invoice price of USD26, up almost 55% from January 2020. On a lighter note, auto exports have been a bright spot all year despite supply chain disruptions, fueled by sales of new energy vehicles. And China has Elon Musk to thank for it. 
<table class="table table-striped">
<tbody>
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<td style="width: 100%;">Exhibit 1: China's Export / Import Growth and Trade Balance</td>
</tr>
<tr>
<td style="width: 100%;">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/240/449/original/image_225136958701636405007254.png?1636405007" class="editor-image img-responsive" data-smartkarma-image-id="240449"></figure>
</td>
</tr>
<tr>
<td style="width: 100%;">Sources: General Administration of Customs, Our analysis </td>
</tr>
</tbody>
</table>

China's resilient export performance in October was a pleasant surprise amid a confluence of bad news on the domestic front. But export strength may be dwindling and progressively tougher comps are not the only factor to blame.
A record trade surplus. Overseas shipments once again topped estimates in October, driving the country's monthly trade surplus to USD84.5bn, the highest on record. The 27.1% growth in exports was propelled by robust global trade activity. China has also been getting a greater share of export orders thanks to still sluggish outputs from competing nations that have yet to return to full capacity. Early Christmas orders to beat shipment delays provided an extra boost (Exhibit 1).
However, price inflation has become the dominant driver, while unit growth has tailed off. Average export prices began to tick up in July and jumped over 10% y/y in September. Overseas buyers will be feeling the pinch of China's surging factory gate prices this Christmas. But more importantly, rising unit prices may suggest that we are now much farther along in the reopening trade in China's key export markets. Demand has shifted considerably from essential to discretionary items. That story may run out of steam soon.
Europe presents additional uncertainties in the coming months, as a spike in infections threatens to throttle its recovery. The EU was pivotal to China's export strength last month, buffering the deceleration in US orders. It remains to be seen whether a wider outbreak on the continent will be a hit to export demand or a catalyst for resurgent sales of household / electronics merchandise. What's more certain is the eventual rebound of Southeast Asia, which will chip away at orders for Chinese exports, especially if power shortages escalate in the winter months.
Price effects will likely continue to drive exports in machinery, electronics and home appliances as we approach the holiday season. That is bad news for international consumers. The average household appliance unit shipped in September had an invoice price of USD26, up almost 55% from January 2020. On a lighter note, auto exports have been a bright spot all year despite supply chain disruptions, fueled by sales of new energy vehicles. And China has Elon Musk to thank for it. 



Exhibit 1: China's Export / Import Growth and Trade Balance







Sources: General Administration of Customs, Our analysis 




China Macro: Surging Export Prices and An Incredibly Expensive X'mas

Alpha-Centric ESG Research

Kyle Rudden

In a recently published report (<a href="https://www.smartkarma.com/insights/cop26-u-n-climate-conference-to-address-mitigation-financing-and-carbon-pricing" target="_blank" data-smartkarma-citation="insights:59779" rel="noopener">COP26: U.N. Climate Conference to Address Mitigation, Financing, and Carbon Pricing</a>) I mentioned how the COP26 international climate conference (31 October to 12 November) will have far-reaching implications for global capital markets and investing.That Insight was largely about the COP26 conference itself – background, objectives, three critical agenda items with trillions of dollars at stake, and that will influence global financial markets from today (headlines coming out of the conference) through the end of this century.That report was necessary context for this Insight and others that will follow; successively deeper dives into country-specific climate action plans, and investment themes and trading ideas around the COP26 conference and climate change in general. This is the first of those follow-up reports.Herein, I present a brief overview of investment themes and angles directly linked to the three key COP26 agenda items: 1) mitigation of global warming, 2) climate finance, and 3) the development of international carbon markets and pricing mechanisms. Themes and subthemes such as:<ul>
<li>
Climate Transition: "Green" utilities, renewable energy, cleantech, electric vehicles and other areas of smart mobility, green buildings, and related. The "buy solar, sell coal" kinds of stuff.</li>
<li>
Climate Financing: Financial sector stocks poised to benefit from climate change mitigation, reduced risk from portfolio debarbonisation, and new inflows into sustainable/ESG funds.</li>
<li>
Carbon Markets: Pure-play (or close thereto) carbon capture and storage/sequestration (CCS) stocks, plus a few financial sector overlaps (e.g., related to carbon markets, futures, etc.)</li>
</ul>

In a recently published report (COP26: U.N. Climate Conference to Address Mitigation, Financing, and Carbon Pricing) I mentioned how the COP26 international climate conference (31 October to 12 November) will have far-reaching implications for global capital markets and investing.That Insight was largely about the COP26 conference itself – background, objectives, three critical agenda items with trillions of dollars at stake, and that will influence global financial markets from today (headlines coming out of the conference) through the end of this century.That report was necessary context for this Insight and others that will follow; successively deeper dives into country-specific climate action plans, and investment themes and trading ideas around the COP26 conference and climate change in general. This is the first of those follow-up reports.Herein, I present a brief overview of investment themes and angles directly linked to the three key COP26 agenda items: 1) mitigation of global warming, 2) climate finance, and 3) the development of international carbon markets and pricing mechanisms. Themes and subthemes such as:

Climate Transition: "Green" utilities, renewable energy, cleantech, electric vehicles and other areas of smart mobility, green buildings, and related. The "buy solar, sell coal" kinds of stuff.

Climate Financing: Financial sector stocks poised to benefit from climate change mitigation, reduced risk from portfolio debarbonisation, and new inflows into sustainable/ESG funds.

Carbon Markets: Pure-play (or close thereto) carbon capture and storage/sequestration (CCS) stocks, plus a few financial sector overlaps (e.g., related to carbon markets, futures, etc.)


COP26: An Overview of Investment Themes and Catalysts Related to COP26 Conference

Latest News from the World’s Leading Innovators

Granite Bay Capital

An innovation focussed investment company

Granite Bay Capital is an innovation focussed investment company with a deep focus on the companies at the leading edge of innovation across major themes such as AI, ubiquitous computing, sustainability, automation and longevity.

Thematic (Sector/Industry)

<h2>Headline Development</h2>Hertz (HTZZ) just made the largest EV purchase ever, acquiring 100k Teslas (TLSA) for a reported $4.2b - half of which will go to Uber (UBER) drivers.  On top of this, Hertz will also invest significantly in EV charging infrastructure across its global operations.

Headline DevelopmentHertz (HTZZ) just made the largest EV purchase ever, acquiring 100k Teslas (TLSA) for a reported $4.2b - half of which will go to Uber (UBER) drivers.  On top of this, Hertz will also invest significantly in EV charging infrastructure across its global operations.

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Capital Markets

<ul><li>Tesla has been one of the hottest stocks this week after the major announcement from Hertz of ordering 100,000 Teslas by the end of 2022.</li><li>The company’s recent financial performance has also been strong with a 57% top-line growth and a 73% year-over-year increase in vehicle deliveries.</li><li>We are optimistic about Tesla and give it an ‘Outperform’ rating with a revised target price.</li></ul>

Tesla has been one of the hottest stocks this week after the major announcement from Hertz of ordering 100,000 Teslas by the end of 2022.The company’s recent financial performance has also been strong with a 57% top-line growth and a 73% year-over-year increase in vehicle deliveries.We are optimistic about Tesla and give it an ‘Outperform’ rating with a revised target price.

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/lg-chem-ltd" target="_blank" data-smartkarma-citation="entities:3583:1" rel="noopener">LG Chem Ltd (051910 KS)</a> reported its 3Q 2021 results today. The company generated sales of 10.6 trillion won (up 41.4% YoY and 6.0% lower than the consensus) and operating profit of 726.6 billion won (down 19.6% YoY and 29.6% lower than the consensus). Although LG Chem's results were stagnant in 3Q 2021, its results are likely to improve materially in 4Q 2021. The consensus currently estimates LG Chem to generate sales of 11.7 trillion won (up 31% YoY) and an operating profit of 1.2 trillion won (up 925% YoY) in 4Q 2021.LG Chem also announced <a href="https://www.chosun.com/economy/industry-company/2021/10/25/5V5L3Z7LONEFPBUA3TKQNRYS7M/?utm_source=naver&amp;utm_medium=referral&amp;utm_campaign=naver-news" target="_blank" rel="noopener">Kwon Young-Soo</a> as the new CEO for LG Energy Solution today. Kwon Young-Soo is currently the Vice Chairman and the Chief Operating Officer (COO) of <a href="https://www.smartkarma.com/entities/lg-corp" target="_blank" data-smartkarma-citation="entities:6653:1" rel="noopener">LG Corp (003550 KS)</a>. Having worked in various companies of the LG Group for nearly 42 years, clearly Kwon Young-Soo shown a lot of loyalty to the LG Group. In addition, he has proven record of successfully leading numerous LG Group businesses. Overall, we believe that the market will have a positive view of the decision to put Kwon Young-Soo as the CEO of LG Energy Solution.At this point, it appears that the higher probability of an IPO for LG Energy Solution is sometime in 1Q 2022, rather than in November/December 2021. LG and GM have settled on a <a href="https://www.reuters.com/article/businessNews/idUSKBN2HF0EO" target="_blank" rel="noopener">$2 billion cost</a> related to the Bolt recall earlier this month, paving the way for an IPO in the next several months.

LG Chem Ltd (051910 KS) reported its 3Q 2021 results today. The company generated sales of 10.6 trillion won (up 41.4% YoY and 6.0% lower than the consensus) and operating profit of 726.6 billion won (down 19.6% YoY and 29.6% lower than the consensus). Although LG Chem's results were stagnant in 3Q 2021, its results are likely to improve materially in 4Q 2021. The consensus currently estimates LG Chem to generate sales of 11.7 trillion won (up 31% YoY) and an operating profit of 1.2 trillion won (up 925% YoY) in 4Q 2021.LG Chem also announced Kwon Young-Soo as the new CEO for LG Energy Solution today. Kwon Young-Soo is currently the Vice Chairman and the Chief Operating Officer (COO) of LG Corp (003550 KS). Having worked in various companies of the LG Group for nearly 42 years, clearly Kwon Young-Soo shown a lot of loyalty to the LG Group. In addition, he has proven record of successfully leading numerous LG Group businesses. Overall, we believe that the market will have a positive view of the decision to put Kwon Young-Soo as the CEO of LG Energy Solution.At this point, it appears that the higher probability of an IPO for LG Energy Solution is sometime in 1Q 2022, rather than in November/December 2021. LG and GM have settled on a $2 billion cost related to the Bolt recall earlier this month, paving the way for an IPO in the next several months.

LG Chem - Major Highlights of 3Q 2021 Earnings & A New CEO for LG Energy Solution

United States

Tesla Inc. operates as a multinational automotive and clean energy company. The Company designs and manufactures electric vehicles, battery energy storage from home to grid-scale, solar panels and solar roof tiles, and related products and services. Tesla owns its sales and service network and sells electric power train components to other automobile manufacturers.

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Tesla (TSLA US)

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